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Should MWRD Bond Issues Be Competitive?

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The Metropolitan Water Reclamation District of Chicago is defending an August decision to sell more than $600 million in capital improvement bonds to a single group of investors.

That’s despite allegations that the sewer system cost taxpayers money by only dealing with one local firm.

Daniel Kaplan is an independent financial consultant who deals with municipal bonds.

KAPLAN: This is a new product, these Build America bonds [BABs] that are taxable, and no one has a good sense about what a AAA bond from a metropolitan water reclamation district is worth. When there’s that much variance, a competitive sale helps sort it out.

Chicago-based asset manager Lincoln Ellis says it would be worse for the agency if the bonds don’t sell at all.

He says the sewer system’s priority is to make sure the bonds are sold and their projects are funded.

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